Best Trend Trading Strategy For All Timeframes

That’s a pretty bold claim here saying “Best Trend Trading Strategy For All Timeframe.”

But as a matter of fact, its quite true and here’s why…with this forex trend trading strategy, you are:

1. only using price action to trade
2. which means no indicators
3. and its very easy for even new forex traders to grasp the trading technique
4. and the trading setups are easy to spot
5. and these type of trading setup happens in all timeframes.
6. and you can trade any currency pair with this trend trading strategy

So if you are a forex trader that trades using 1 minute to 5minute timeframes, you can use this forex strategy as well as those that trade larger timeframes.

SO WHAT IS THIS TREND TRADING STRATEGY THAT IS BASED ON PRICE ACTION TRADING?

Well, its based on the concept of support and Resistance trading.

If you don’t know what are support and resistance levels are then here is my simple definition:

What is a support level?

A support level is the level at which price bounced up from after it had been going down for some time. You will see support levels a “valleys” on a price chart.

What is a resistance level? 

A resistance level is the level at which price bounced down from after it had been climbing up for some time. You will see resistance levels as “peaks” on your price chart.

With this system, there’s a slight twist:

• when the price breaks a support level, there will be times when it will go back up to the previous support level that it just broke some time ago. Now this previous support level often tends to act as a resistance level from which price hits it and falls back down.

• the opposite is also true…when price breaks a resistance level and climbs higher, there will be times when it will fall back down to the previous resistance level that it just broke some time ago.  This previous resistance level often tends to act as a support level from which price bounces back up.

In a good trending market, you will see these support and resistance levels being formed and you will see how price reacts to these levels as they get broken.

So the trading rules are built around those points mentioned above.

Here is a chart to give you a more clearer picture…notice that those blue boxes on the forex chart indicate the support levels that have been previously broken and later price went back up to test those levels.

TRADING RULES OF THIS TREND TRADING STRATEGY

1. For a sell trading setup, a support level must be broken first and price moves down for some time and then eventually starts to clime up again to test his previous support level it broke.
2. You can either place a sell limit order, an instant market order or use a sell stop order to get into a trade at this support-turned-resistance level.
3. Place you stop loss 3-5 pips above the high candlestick with the highest high (this is for a sell situation…do the opposite for buy situation)
4. For take profit target, measure the distance in pips between the where the support level down to where price starts rising back up to test the broken support level and use that pips and multiply by 2 or 3 and that gives you how many pips of profit you need to set at whatever price level it falls to.

THE BEST THING ABOUT THIS TREND TRADING STRATEGY

• it is a very reliable trend trading system when used in larger timeframes.
• having said that, this can used in very small timeframes successfully as well.
• you stop loss distance is really in an ideal place or level, just above the resistance level or just below the support level and this makes it hard to get stopped out prematurely.
• the risk to reward ratio of this trend trading strategy is really good.
• you can use candlesticks to confirm your entry for buy or sell.